B.C. Pipeline Revenue May Be Least Compared To Ontario And Alberta: Report

VANCOUVER - Based on straight math, British Columbians shouldn't be surprised to learn they will draw far fewer economic benefits than Alberta — or even Ontario — from the Northern Gateway pipeline, says a new report.

B.C. Premier Christy Clark has argued her province has taken on 100 per cent of the marine risk while receiving not much more of the economic benefit than provinces that have no risk at all.

But a research report released Tuesday by the Canadian Energy Research Institute concludes B.C.'s what-if concerns aside, Ontario stands to gain much more because of its position as Canada's manufacturing heartland.

The report examined only the forecasted value of ongoing upstream oil sands development.

"Ontario services the oil sands projects with steel and materials and equipment more so than British Columbia does," said Dinara Millington, senior research director with the institute. "The outputs of one sector ... would become inputs in the oil sands industry sector."

The new report calculates the value of several key economic indicators around current and future oil production if Enbridge's (TSX:ENB) Northern Gateway and two other major pipeline projects go ahead as proposed.

Including the expansions by Kinder Morgan and Keystone XL, the report predicts Alberta alone will collect half a trillion dollars in taxes over 25 years but B.C. will only reap $9 billion. Ontario would garner $28 billion.

B.C. gains its taxation revenue from oil development mainly due to geography — its proximity to Alberta — and via a gas plant that exports gas to northern Alberta for oil sands projects' use, Millington said.

Spotlighting only the Northern Gateway project, researchers concluded B.C. will make $1 billion in tax revenues, as opposed to Alberta at $73 billion and Ontario at $4 billion.

Over the same period, the report found the project will boost B.C.'s gross domestic product by 5.1 per cent, as opposed to 352.3 per cent for Alberta and 11.4 per cent for Ontario.

The project equates to 76,000 person-years of employment for British Columbians, in contrast with 1,853,000 for Alberta and 155,00 for Ontario.

The institute is a Calgary-based organization jointly funded by Ottawa, Alberta and the Canadian Association of Petroleum Producers, an industry lobby group. It utilized a well-known economic model, along with Statistics Canada data and its own forecasts to make the predictions.

The organization plans to release a second report Aug. 9 that specifically looks at the economic benefits related to construction of the Northern Gateway pipeline. Millington said she expects the analysis to show most of those benefits accrue to B.C.

The new analysis builds on other research recently submitted by B.C.

Data from Wright Mansell, which looks at both oil sands production and pipeline construction, contends the province would gain about eight per cent in projected provincial tax revenues over 30 years, while Alberta would get about 40 per cent.

Despite the economic sense in the numbers, Prof. Douglas Macdonald, with the University of Toronto's environment school, said B.C.'s is "completely understandable."

His current research, in conjunction with Carleton University, is aimed at devising a national energy strategy that puts a cost on environmental risk and the effects of carbon emissions.

His research aims at creating a formula for sharing the costs and benefits of such projects.

He said it would begin by looking at, say, the tax owed to Ontario.

"But it will also include, what are the costs that different provinces are incurring by reducing emissions, what are the benefits they're getting from a green energy manufacturing strategy, and a whole bunch of things," he said.

But he acknowledged the political difficulty, saying the federal government would be required to spearhead the task and it's likely some provinces might try to stall its progress.

"But if you don't do that, then you're just going to be locked into things like the Alberta-B.C.. feud," he said, "which ultimately is going to prevent us from moving forward on either the energy side or the climate change side."

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Alberta Oil Spills

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Enbridge Inc.'s Athabasca pipeline leaked an estimated 230,000 litres of oil about 24 kilometres southeast of Elk Point, Alberta.
A member of Greenpeace cleans up a mock oil spill outside the Enbridge Northern Gateway pipeline office in downtown Vancouver, Wednesday, June 13, 2012. The mock spill was set up by Greenpeace to show the risks of spills similar to the recent one outside of Red Deer, Alberta. THE CANADIAN PRESS/Jonathan Hayward

Although the spill didn't leak into any waterways, Energy Resources Conservation Board's Darin Barter said the spill was considered "significant" in size.
"Any amount of crude oil out of a pipeline is significant to us. Obviously we've had a number of pipeline incidents in the past short while and we're monitoring cleanup on them and we have a number of investigations underway."

An estimated 475,000 litres of oil spilled from a Plains Midstream Canada pipeline and proceeded to leak into the Red Deer River.
Oil from a pipeline leak coats a pond near Sundre, Alta., Friday, June 8, 2012. Plains Midstream Canada says one of their non-functioning pipeline leaked between 1,000-3,000 barrels of oil. THE CANADIAN PRESS/Jeff McIntosh

Some of the oil seeped into the Gleniffer reservoir, which some Albertans rely on for drinking water. Plains Midstream Canada trucked in drinking water for those residing near the area.

Pace Oil and Gas's waste disposal line leaked about 22,000 barrels of a mixture of oil and water 20 kilometres southeast of Rainbow Lake. The spill was discovered on May 19 by another oil and gas company.

The oil spill "ranks among the largest in North America in recent years," the Globe and Mail wrote.

A pipeline explosion and oil leak at a Pengrowth Energy facility caused a pipeline to leak 500 barrels of light, sweet crude oil into Judy Creek near Swan Hills, Alberta.

Energy Resources Conservation Board spokesman Darin Barter said the leak was relatively small.
"It's what we would consider a minor spill with 95 per cent of the product coming out of the pipeline being water and five per cent oil," he told CBC. "However, we're taking it very seriously, as is the company."